Citation

Ruhm CJ, Jones AS, Kerr WC, Greenfield TK, Terza JV, Pandian RS, McGeary KA. NBER Work. Pap. Ser. 2011; 2011(online): w17578.

Copyright

(Copyright © 2011, National Bureau of Economic Research)

DOI

unavailable

PMID

unavailable

Abstract

This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series used. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities. Instead, the estimates obtained using ACCRA prices vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. However, since beer taxes are actually likely to poorly indicate prices, it is not surprising that the estimated beer tax elasticities are close to zero. We believe that our most useful estimates are obtained using annual Uniform Product Code (UPC) or "barcode" scanner data on grocery store alcohol prices. These estimates suggest a relatively low price elasticity of demand for beer, probably around -0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices.